99.07

OPINION NO. 99-07

An opinion has been requested by a member of the Board of Morticians regarding application of the Ethics Law to his services as an officer and board member of the International Conference of Funeral Service Examining Boards (the Conference). An issue has also been raised as to his Board service in view of his recent change in employment to a funeral service establishment whose owner/officer is also a member of the Board of Morticians. We advise that the Member's affiliation with the Conference is allowable to the extent it is in his official capacity as a representative of the Board to the Conference. We further advise, however, based upon a recent opinion regarding board membership by individuals that have private employment relationships, that the contemporaneous membership by two employees of the same private entity is prohibited by the inconsistent employment provisions of the Ethics Law, and could continue under the circumstances of this request only if the individuals are reappointed and a Time of Appointment Exemption Disclosure is accepted by the appointing authority.

The State Board of Morticians is a unit within the Department of Health and Mental Hygiene. It has 12 members, including 4 consumers and 8 licensees, all appointed by the Governor. Originally established in 1902, the Board is responsible for registering and licensing every funeral director and mortician within the State. The Board issues mortician licenses to applicants who meet statutory criteria, including, among other things, passage of the Conference's National Board Examination (NBE) and passing a written and practical examination administered by the Board on Maryland law and embalming and sanitary science. According to Board's Executive Director the Conference exam is given through the applicant's school, based on arrangements between the College and the Conference, and application directly by the applicant. The Board has no role in the operational aspects of the NBE testing process.

The Maryland law and practical exam is generated and administered by the Board. It is currently put together by a joint effort of the Executive Director, the Board's counsel and the Chair of the Board's Continuing Education Committee. The two-part test is proctored/administered by the Executive Director and Board members who volunteer to participate. The Board, however, has recently determined to pursue the option of purchasing exam drafting services through a contract, possibly with the Conference. Apparently preliminary discussions to this end have been held with the Conference's Executive Director and a draft contract has twice been the subject of Board consideration. It is anticipated that this will be done during Fiscal Year 2000. Though there are apparently a variety of entities that write professional tests, it is not clear whether there are test preparation sources in this profession other than the Conference.

The Member was appointed to the Board in 1995. At that time he was employed as a funeral director and Vice President of a family business, and was appointed as a licensed mortician. Also at the time of his appointment, he was serving as a member and Secretary of the District of Columbia Board of Funeral Directors, which position was resigned when he was confirmed for appointment to the Maryland Board. A resume available to the appointing authority at the time also showed his membership in the Conference of Funeral Service Examining Boards as well as two funeral director associations, though he did not hold an office in any of these organizations when he was appointed. The Member has served one full term on the Board and his position is currently being considered for reappointment. He is the Board's 2nd Vice President, and serves on the Apprentice, Rehabilitation, and Legislative Committees of the Board.

The Conference is a privately incorporated organization of state funeral director licensing agencies. Membership in the Conference by individuals in the profession generally is not allowed, but individuals who serve on member boards are automatically designated by it as members of the Conference. The Member was thus a member of the Conference at the time of his appointment by virtue of his service on the DC licensing Board. The Maryland Board has been a member of the Conference for many years. According to the Member, the Conference consists of nine districts, with the 2nd District including 6 states in the mid-Atlantic area and the District of Columbia. The districts meet annually and elect a representative of the district to serve on the organization's national board. The Member advises that he was elected in 1995 to represent the 2nd District for a 3-year term, and was reelected in 1998.

The Member indicates that he was elected by the Conference Board to serve as its Secretary-Treasurer this year, and has two years remaining on his regular term. He says that he anticipates being President of the organization eventually. He is not compensated,though his expenses (including travel) are reimbursed. The Member advises that his activities with the Conference involve attending two Board of Directors meetings per year in the Fall and the Spring, where the Board plans the organization's convention, decides on policy and makes other decisions relating to running the organization, and he serves on several committees. He indicates that the Conference has a full-time Executive Director and two other staff members who are responsible for implementing the activities of the Conference. There is also a contractual testing consultant, Applied Measurement Professionals, that develops and implements the National Board Examination.

The Strategic Plan for the Conference describes its mission as being "the resource for examination and information for funeral service regulatory agencies, to support education and to foster communication within the profession." Its goals include marketing itself to prepare state exams, increasing recognition among the states of the NBE for licensure (this is done in Maryland now), and developing and promoting a continuing education program. The Conference Counsel indicates that the organization is a nonprofit and that it requires its board members to be members of state licensing boards. According to the Counsel, the Conference works with a consultant to develop state exams, and Conference Board members do not have a role in this activity. He advises further that the Member is viewed by the Conference as a representative of his state's licensing board. Apparently in the past, the President of the Maryland Board of Morticians has been the only person to attend the Conference convention officially on behalf of the Board and at its expense. We are not aware of any specific decision by the full Board as to whether the Member would officially serve as its representative in connection with his service as an officer of the Conference.

A second question raised in this matter relates to the fact of the Member's recent change of employment from a family business to affiliate with a larger funeral establishment in the area (the Company). His new employer is a business including two funeral homes, a cemetery, a floral shop and other entities. The Member indicates that he contacted the head of the Company and was hired by it in April to be its Director of Training and Development. He says that he had only minimal discussions regarding this possible employment with another family member/owner of the Company who is also a member of the Board of Morticians. He indicates that he seldom interacts with this individual in the context of his duties with the Company, though he is a senior manager and she is a principal in the company and a member of its board of directors. This individual further advises that her duties involve public relations and tend not to entail the operational aspects of the Company's work that would bring her into any regular interaction with the Member. She is, however, an owner of the Company and as a member of its board of directors would have some authority in hiring and retention of upper management staff.

This situation presents issues primarily under the employment prohibitions of §15-502 of the Ethics Law (State Government Article, §15-502, Annotated Code of Maryland, the Ethics Law). This section prohibits public officials, including appointed members of boards and commissions, from being employed by or having an interest in an entity that contracts with or is subject to the authority of their agency (subsection (b)(1)), or from having any other employment that would impair their impartiality or independence of judgment (subsection (b)(2)). The Commission has in many prior opinions indicated that service as an officer on the operational and management board of a private entity, given its fiduciary responsibilities and duties of loyalty, is an employment relationship even if the service is not compensated. We have said further, that where the private entity has relationships with the State agency, such as being a board of an association of licensees, an organization engaged as an advocate as to matters before the individual's agency, or a vendor to the agency, then the service on the entity's board is employment that is within the prohibition of §15-502. The Commission has generally said that being a member of an organization, including serving on various non-board committees, is not an employment relationship covered by this prohibition. (See Opinions No. 83-13, No. 87-1 and No. 90-14. Opinions published in COMAR 19A.)

Following this approach, we advise that the Member's service as an officer of the Conference would be viewed as employment for purposes of the Ethics Law. Also, given the entity's advocacy role regarding various licensing and legislative issues, as well as its potential contractual dealings with the Board to create the Board's state law test, we believe that this service comes within the prohibition and is barred unless it is viewed as part of the member's official role as a Board member,or an exemption applies. As to the first possibility, we have considered situations where affiliation with a national or a private organization has been viewed as part of one's official duties. In Opinion No. 86-32, for example, two employees had been appointed to serve with a private organization of criminal information agencies in the 50 states. One of these individuals had been elected by the membership of the organization to serve on its Board of Directors. Since the service was by virtue of the individual's official duties, the affiliation was allowed. Also, even though he was elected generally by the membership to serve as an officer (rather than being appointed to fill a "Maryland seat" as a Director), the Commission concluded that this too was allowable. This approach was taken even though the organization had and anticipated contracts with the individual's agency.

It was clear in Opinion No. 86-32 that the individual served both as a member of the organization generally and as a director only by virtue of his Maryland position, and that if he left the Maryland position he would be out of the organization. This would appear to be similar to the Member's relationship with the Conference. However, though the Member serves as a member and as an officer of the Conference only by virtue of his appointment by the Governor to the Board, it is not clear whether his activities as an officer of the Conference are in a representative capacity on behalf of the Maryland Board of Morticians. We believe that this determination is a matter for that Board. If the Board of Morticians decides that the Member's service as an officer of the Conference is as a Maryland representative whose duty is to reflect State and Board policy, then we believe that his continued service would be allowable consistent with our many prior opinions dealing with this type of service.

If the Board concludes that the Member is not its official representative to the Conference for these purposes, then the question is whether the Ethics Law allows any exemption that would permit this affiliation to continue nevertheless. Though there are several exception and exemption provisions in the Law, in our view the one most relevant to this situation is the time of appointment exemption provided for in §15-502(c)(4). Under this provision a board or commission member is exempt from the strict employment prohibitions of the section as to conflicts held at the time of appointment and disclosed to the appointing authority, the Commission and the Senate if confirmation is required. The principle of this exemption, added to the Law in 1981, is to allow the appointing authority to make the substantive decision as to a private citizen appointee with known conflicts of interest. Though he was a member of the Conference at the time of his original appointment in 1995, the Member did not hold the office that is a conflict now, and therefore there could be no time of appointment disclosure exemption applying in his current service. However, this issue has been presented contemporaneously with his being considered for reappointment. We believe that his affiliation as an officer of the Conference could be included on a Time of Appointment Exemption Disclosure Statement in connection with a new appointment and if accepted by the appointing authority would be exempted from the §15-502 prohibition. Other conduct provisions of the Law would, of course, continue to apply, and he would not be allowed to participate in matters relating to sales of testing services to Maryland or to lobby policy changes on behalf of the Conference.

The second question presented by these circumstances arises from the Member's recent employment with the Company. This results in a situation where there are two members of the Board affiliated with the same private entity. Though the Member is a senior manager and indicates that he has little interaction with his fellow Board member in his job with the Company, as a principal with the company and a member of its board of directors, this individual would appear to hold a supervisory relationship to the Member in his private affiliation. We believe that this employment relationship raises concerns similar to those that we addressed recently in our Opinion No. 99-3 (published in 26:16 Md. R. 1280 (July 30, 1999)). In this opinion we generally concluded that in situations where there is a private relationship between individual board members, there is an inherent potential for individuals to be influenced in their official functions by the views of others who can negatively impact on their livelihood.

In the situation here as in other situations, it is clear that the Board faces many important regulatory issues where there are real differences of opinion and competing economic interests among the members. We therefore continue to believe that as a general rule, private economic relationships among members present a continuing potential for impairment in official action that is ongoing, difficult to manage and almost impossible to monitor. We thus conclude that these types of relationships between and among board or commission members in these circumstances are prohibited by §15-502. The contemporaneous service presented here by two persons affiliated with the Company would thus in our view result in inconsistent employment concerns under §15-502(b)(2) of the Law. We note, however, that both of these individuals are currently being considered for reappointment, and advise that consideration of whether the continued service of these two individuals is desirable despite their common affiliation with the Company is a matter appropriately considered and determined by the appointing authority in the context of the time of appointment process. Where there is an exemption, of course, other provisions of the Law, such as nonparticipation and the prohibition against misuse of prestige of office, would continue to apply.

Charles O. Monk, Chairman,
    Dorothy R. Fait,
    Michael L. May

Date: November 10, 1999